Enterprise Digital Adoption

Last Year's CIO survey by Harvey Nash and KPMG pointed to the resurgent role of CIOs in taking responsibility for driving enterprise digital agendas. This goes with rising acceptance and adoption of Digital As Usual (DAU) or Digital as the New Normal.

Yet a recent article from MIT Sloan business school (by Gerald Kane) pointed to the blindness that appears to exist in many large corporations. 4 times as many CxOs see the opportunities as those who recognise the risks that digital poses to them. They don't seem to recognise the competitive risks or the erosion of brand loyalty which is much more volatile amongst digital customers.

Interestingly enough, nearly 90% of CxOs appear to believe that digital disruption will affect their businesses, but less than 50% believe that their businesses are properly prepared to address the challenges.

So there is an apparent disconnection between CxO understanding and reality, when it comes to addressing digital challenges.

Another survey, this time from Deloitte, may provide some diagnostic context. This survey show that CIOs basically operate in 3 different modes: Trusted Operator, Change Instigator, and Business Co-creater. 55% are still locked into the Trusted Operator model, whilst a third claim to be operating in Business Co-creator mode. This number needs to double, if CIOs are genuinely going to help lead digital adoption.

In another diagnostic produced by the survey the top 5 priorities were listed (in descending order of priority) as Customers, Growth, Performance, Cost and then Innovation. Showing that priorities are starting to move towards a digital friendly model, but are not quite there yet. As TQM gurus such as Demming said, focusing on Growth and Cost above quality (which is not really mentioned) leads to higher costs and lower growth. Also, Digital Customers expect Innovation, Experience and Ethics above everything else. Note, previous surveys had put Customers lower down the priority list, so this does represent some gradual cultural progress.

Interestingly enough the survey identified a number of CIO capabilities as core to success: Strategic Alignment, Execution, Vision and Strategy, Innovation and Talent & Culture, which at least recognises the criticality of culture to positive digital exploitation.

Putting this together, what does it all mean. One diagnosis would be that existing enterprises will gradually learn to adapt, but they are not quite there yet. So whilst they will survive, they are still leaving room for innovative companies to enter their market places or create new market places and grow rapidly to become competitors. So the composition of the FTSE 100 and definitely the FTSE 250 is going to change significantly over the next few years.